Court quashes PMLA order for lack of jurisdiction.

The court found the order dated 25.07.2022 by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002 (PMLA) to be without jurisdiction due to the absence of a scheduled offence against the petitioners. Consequently, the order was set aside and quashed. The court did not address the impact of not passing an order under sub-section (2) of Section 20 of PMLA on the PMLA proceedings. The writ petition was allowed, and pending miscellaneous applications were closed.

---

---

Issues involved:
1. Legality of the Adjudicating Authority's order dated 25.07.2022.
2. Constitutionality of Sections 6(5)(b) and 6(7) of PMLA.
3. Validity of proceedings under PMLA without a scheduled offence.

Summary:

1. Legality of the Adjudicating Authority's order dated 25.07.2022:
The petitioners filed a writ petition under Article 226 of the Constitution seeking to quash the order dated 25.07.2022 passed by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002 (PMLA) and to direct the defreezing of their bank accounts and return of documents/records. The petitioners contended that the retention and freezing of property under Section 20(2) of PMLA could not be permitted beyond 180 days. The seizure under Section 17 of PMLA was made on 07.10.2021, and the freezing order was passed on 11.10.2021. The statutory limitation for retention expired on 07.04.2022, and for freezing, it expired on 11.04.2022. The impugned adjudication order was passed on 25.07.2022, well beyond the statutory period. Additionally, the petitioners argued that the order was passed by a single Finance Member, violating Sections 6(2) and 6(5) of PMLA, and questioned the vires of Sections 6(5)(b) and 6(7) of PMLA.

2. Constitutionality of Sections 6(5)(b) and 6(7) of PMLA:
The petitioners challenged the constitutionality of Sections 6(5)(b) and 6(7) of PMLA, arguing that they were arbitrary and violative of Article 14 of the Constitution of India. They contended that these provisions allowed the Adjudicating Authority to function with only a single member, which was contrary to the requirement of a quorum and judicial member presence for adjudicating intricate questions of law.

3. Validity of proceedings under PMLA without a scheduled offence:
The petitioners argued that there was no scheduled offence against them, particularly no proceedings under Section 135 of the Customs Act. They contended that in the absence of a scheduled offence, proceedings under PMLA could not continue as a standalone offence. The court examined the factual background, including the search and seizure conducted by the Directorate of Revenue Intelligence (DRI) and the subsequent actions by the Enforcement Directorate. It was found that the Enforcement Directorate proceeded on an erroneous assumption that there was a scheduled offence against the petitioners. The court held that mere arrest by a customs officer for alleged contravention of the Customs Act did not make the arrested person an accused. No complaint had been filed against the petitioners under Section 200 Cr.P.C read with Section 135 of the Customs Act. Therefore, it could not be said that there was any predicate offence against the petitioners.

Conclusion:
The court concluded that the impugned order dated 25.07.2022 was without jurisdiction as there was no scheduled offence against the petitioners. Consequently, the order was set aside and quashed. The court did not delve into the question of the impact of not passing an order under sub-section (2) of Section 20 of PMLA on the PMLA proceedings. The writ petition was allowed, and the miscellaneous applications pending were closed.

---